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GAO-09-283R: 

United States Government Accountability Office: 
Washington, DC 20548: 

February 17, 2009: 

The Honorable Edolphus Towns:
Chairman:
Committee on Oversight and Government Reform: 
House of Representatives: 

The Honorable Darrell Issa:
Ranking Member:
Committee on Oversight and Government Reform: 
House of Representatives: 

Subject: Federal Real Property: Authorities and Actions Regarding 
Enhanced Use Leases and Sale of Unneeded Real Property: 

Many federal agencies hold real property that they do not need, 
including property that is underutilized or excess.[Footnote 1] Such 
properties present significant potential risks to federal agencies 
because they are costly to maintain and could be put to more cost- 
beneficial uses or sold to generate revenue for the government. We 
first designated federal real property management as a high-risk area 
in January 2003 due to long-standing problems with underutilized and 
excess property, among other things.[Footnote 2] After our high-risk 
designation, President George W. Bush added real property management to 
the President's Management Agenda and directed that the Federal Real 
Property Profile (FRPP) be established as a comprehensive database of 
real property under the control and custody of executive branch 
agencies, with agencies required to report on their real property 
assets each year.[Footnote 3] The President also established a goal of 
disposing of $15 billion in unneeded real property assets by 2015 to 
encourage agencies to right-size their portfolios by eliminating 
unneeded property. 

Some federal agencies have been granted authorities to enter into 
enhanced use leases (EUL)--typically long-term agreements with public 
and private entities for the use of federal property, resulting in cash 
and/or in-kind consideration for the agency--or to retain the proceeds 
from the sale of real property. Given the large number of unneeded 
properties being held by the federal government, you asked that we 
review how agencies are using their disposal authorities. Therefore, we 
addressed (1) what authorities the 10 largest real property holding 
agencies have to enter into EULs and retain proceeds from the sale of 
real property; (2) the extent to which agencies with authority to 
retain proceeds sold real property and how they have used the proceeds; 
and (3) the relationship, if any, between agencies having the authority 
to enter into EULs or retain sales proceeds and the amount of real 
property that they retained or sold. 

To address these questions, we analyzed agencies' legal authorities 
related to EULs and the sale and retention of proceeds of real 
property; analyzed agency real property and FRPP data; and gathered, 
analyzed, and synthesized documentary and testimonial evidence of the 
10 largest real property holding federal agencies (by value of real 
property). These 10 agencies include the Department of Agriculture 
(USDA), Department of Defense (DOD), Department of Energy (DOE), 
Department of the Interior (DOI), Department of Justice (DOJ), 
Department of State (State), Department of Veterans Affairs (VA), 
General Services Administration (GSA), National Aeronautics and Space 
Administration (NASA), and the United States Postal Service (USPS). For 
the purposes of this review, the term "real property" does not include 
real property that DOD has or is planning to dispose of through the 
Base Realignment and Closure Act (BRAC) process,[Footnote 4] lands 
managed by DOI or the Forest Service (except for Forest Service 
administrative sites), and transfers of individual properties 
specifically authorized by Congress. We also conducted site visits of 
real property that agencies have recently sold, exchanged, or were 
attempting to sell, and a property being leased under an EUL agreement 
and collected data from agencies on their real property sales during 
fiscal years 2006 and 2007. (See Enclosure I for additional information 
on our scope and methodology.) 

We conducted our work in Arlington, Va.; Camp Verde, Ariz.; Colorado 
Springs, Colo.; Denver; Estes Park, Colo.; Glendale, Ariz.; 
Guilderland, N.Y.; Hillsborough, N.J.; Loveland, Colo.; Middle River, 
Md.; New York City; Peoria, Ariz.; Rotterdam, N.Y.; Scotia, N.Y.; 
Scottsdale, Ariz.; Sedona, Ariz.; Tucson, Ariz.; and Washington, D.C., 
from April 2008 through February 2009. 

Results in Brief: 

The 10 largest real property holding agencies have different 
authorities regarding EULs and retention of proceeds from the sale of 
real property. As of the end of fiscal year 2008, 

* six agencies had both the authority to enter into EULs and sell and 
retain the proceeds from the sale of real property (DOD, GSA, State, 
USDA's Forest Service, USPS, and VA); 

* two agencies had EUL authority but no authority to retain proceeds 
from the sale of real property (DOE and NASA); and: 

* three agencies had no authority either to enter into EULs or retain 
proceeds from the sale of real property (USDA,[Footnote 5] excluding 
the Forest Service; DOI;[Footnote 6] and DOJ). 

Authorities are agency-specific and include different provisions. For 
example, while VA is authorized to enter into EULs for "underutilized" 
or "unutilized" real property, DOD is authorized to enter into EULs 
only for "nonexcess" real property. In addition, while DOD, GSA, and VA 
have the authority to retain proceeds from the sale of real property, 
DOD (in some cases), GSA, and VA are required to follow several steps 
before possibly selling the property, including offering it to other 
federal agencies, eligible organizations that will use the property to 
assist the homeless, and other public benefit purposes. However, the 
Forest Service, State, and USPS sell real property and retain the 
proceeds without following these additional steps. Moreover, four 
agencies have the authority to retain proceeds from the sale of real 
property and use them without further congressional action (DOD in 
certain cases, the Forest Service, State,[Footnote 7] and USPS) while 
further congressional action is required before two agencies (VA for 
nonEUL property[Footnote 8] and GSA) may use the proceeds. 

The six agencies with authority to retain proceeds reported selling 
property to varying extents and using proceeds primarily to help manage 
their real property portfolios. Governmentwide data reported to the 
FRPP were not sufficiently reliable to quantify the extent to which 
these agencies sold real property. As a result, we were unable to use 
the FRPP to analyze the number of sales of real property by agencies 
with the authority to retain proceeds. However, the six agencies we 
contacted that have authority to retain proceeds from the sale of real 
property provided data on their net proceeds from the sale of real 
property during fiscal years 2006 and 2007, which ranged from $21 
million to $541 million per agency. While some properties sold for tens 
of thousands of dollars, others sold for over $200 million. Agencies 
generally reported using the sales proceeds to manage their real 
property portfolios, such as rental of space, building operations, new 
construction and acquisition, maintenance, and repairs and operations. 

Agency officials generally said that the authorities to enter into EULs 
and sell real property and retain the proceeds influenced the amount of 
property that is kept and sold and that they preferred using the 
authorities that were the least restrictive. Because we were unable to 
quantify the number of properties that agencies sold during fiscal 
years 2006 and 2007, we asked agency officials about their views on the 
relationship between having the authorities to enter into EULs or 
retain sales proceeds and the amount of real property that they sell. 
Of the six agencies with the authority to retain proceeds from the sale 
of real property, officials at five agencies (the Forest Service, GSA, 
State, USPS, and VA) said that this authority is a strong incentive to 
sell real property, while officials at DOD said that the authority to 
retain proceeds is not a strong incentive to sell real property. 
Agencies with both authorities--to enter into EULs and retain proceeds 
from the sale of real property--prefer using the authority with the 
fewest restrictions. For example, VA indicated that EUL authority 
allows the agency to manage unneeded property because (1) VA may enter 
into EUL agreements without following steps required to sell real 
property, such as screening the property for use by the homeless, and 
(2) VA has the authority to retain and spend proceeds generated from 
EULs without the need for further congressional action. On the other 
hand, officials at USPS said that USPS has little incentive to enter 
into EULs and instead focuses on selling or exchanging property to 
maximize benefits to its real estate portfolio. The five agencies that 
do not have the authority to retain proceeds from the sale of real 
property (DOE; DOI; DOJ; NASA; and USDA except for the Forest Service), 
provided mixed responses about the extent to which such an authority 
would be an incentive to sell unneeded real property. While officials 
at all five agencies said that they would like to have such expanded 
authorities to help manage their real property portfolios, officials at 
two of those agencies said that due to challenges such as the security 
needs or remote locations of most of their properties, it was unlikely 
that they would sell many properties. 

We requested comments on a draft of this report from the 10 real 
property holding agencies in our review and OMB. DOE, GSA, and DOI 
agreed with the information presented in the report. DOE, GSA, NASA, 
OMB, State, USDA, and VA provided technical clarifications, which we 
incorporated throughout the report as appropriate. The other agencies 
did not provide comments. 

Agencies Have Different Authorities Regarding EULs and Retention of 
Proceeds from Sale of Real Property: 

Separate legislation has provided agencies with their own statutory 
authorities regarding EULs and retaining proceeds from the sale of real 
property. The 10 largest real property holding agencies have different 
authorities for EULs and retention of proceeds from the sale of real 
property. As of the end of fiscal year 2008, eight agencies had the 
authority to enter into EULs (DOD, DOE, GSA, NASA, State, USDA's Forest 
Service, USPS, and VA) and six agencies (DOD, the Forest Service, GSA, 
State, USPS, and VA) had the authority to sell and retain proceeds from 
the sale of real property. Six agencies had both authorities to enter 
into EULs and to retain proceeds from the sale of real property (DOD, 
GSA, State, USDA's Forest Service, USPS, and VA); two agencies had EUL 
authority but no authority to retain proceeds from the sale of real 
property (DOE and NASA); and three agencies had no authority to enter 
into EULs or retain proceeds from the sale of real property (USDA, 
excluding the Forest Service; DOI; and DOJ).[Footnote 9] The 
authorities of these agencies are shown in table 1. For more 
information on agencies' legal authorities related to real property 
EULs, sales, and retention of proceeds, see enclosure II. 

Table 1: Agencies' Authorities Regarding EULs and Real Property Sales: 

Agency: DOD; 
Authority to enter into EULs and retain leasing proceeds: [Check]; 
Authority to use proceeds from EULs without further congressional 
action: [Check]; 
Authority to sell real property and retain sales proceeds: [Check]; 
Authority to use proceeds from sales without further congressional 
action: [Check][A]. 

Agency: DOE; 
Authority to enter into EULs and retain leasing proceeds: [Check][B]; 
Authority to use proceeds from EULs without further congressional 
action: [Empty]; 
Authority to sell real property and retain sales proceeds: [Empty]; 
Authority to use proceeds from sales without further congressional 
action: [Empty]. 

Agency: GSA; 
Authority to enter into EULs and retain leasing proceeds: [Check]; 
Authority to use proceeds from EULs without further congressional 
action: [Empty]; 
Authority to sell real property and retain sales proceeds: [Check]; 
Authority to use proceeds from sales without further congressional 
action: [Empty]. 

Agency: DOI[C]; 
Authority to enter into EULs and retain leasing proceeds: [Empty]; 
Authority to use proceeds from EULs without further congressional 
action: [Empty]; 
Authority to sell real property and retain sales proceeds: [Empty]; 
Authority to use proceeds from sales without further congressional 
action: [Empty]. 

Agency: DOJ; 
Authority to enter into EULs and retain leasing proceeds: [Empty]; 
Authority to use proceeds from EULs without further congressional 
action: [Empty]; 
Authority to sell real property and retain sales proceeds: [Empty]; 
Authority to use proceeds from sales without further congressional 
action: [Empty]. 

Agency: NASA; 
Authority to enter into EULs and retain leasing proceeds: [Check]; 
Authority to use proceeds from EULs without further congressional 
action: [Check]; 
Authority to sell real property and retain sales proceeds: [Empty]; 
Authority to use proceeds from sales without further congressional 
action: [Empty]. 

Agency: State[D]; 
Authority to enter into EULs and retain leasing proceeds: [Check]; 
Authority to use proceeds from EULs without further congressional 
action: [Check]; 
Authority to sell real property and retain sales proceeds: [Check]; 
Authority to use proceeds from sales without further congressional 
action: [Check][E]. 

Agency: USDA (except the Agricultural Research Service[F] and the Forest
Service); 
Authority to enter into EULs and retain leasing proceeds: [Empty]; 
Authority to use proceeds from EULs without further congressional 
action: [Empty]; 
Authority to sell real property and retain sales proceeds: [Empty]; 
Authority to use proceeds from sales without further congressional 
action: [Empty]. 

Agency: USDA (Forest Service)[G]; 
Authority to enter into EULs and retain leasing proceeds: [Check][H]; 
Authority to use proceeds from EULs without further congressional 
action: [Check]; 
Authority to sell real property and retain sales proceeds: [Check]; 
Authority to use proceeds from sales without further congressional 
action: [Check]. 

Agency: USPS; 
Authority to enter into EULs and retain leasing proceeds: [Check]; 
Authority to use proceeds from EULs without further congressional 
action: [Check]; 
Authority to sell real property and retain sales proceeds: [Check]; 
Authority to use proceeds from sales without further congressional 
action: [Check]. 

Agency: VA; 
Authority to enter into EULs and retain leasing proceeds: [Check]; 
Authority to use proceeds from EULs without further congressional 
action: [Check]; 
Authority to sell real property and retain sales proceeds: [Check]; 
Authority to use proceeds from sales without further congressional 
action: [I]. 

Source: GAO analysis and information provided by the above agencies. 

Note: Authorities through fiscal year 2008. 

[A] In certain cases, the use of proceeds from the sale of DOD real 
property is subject to further congressional action. See footnote 13. 

[B] According to DOE, the department has determined that it has EUL 
authority on the basis of the definition set forth in OMB Circular A-11 
(June 2008). DOE officials said that the department has not entered 
into any EULs using this authority. 

[C] While DOI has certain authorities to sell real property, we did not 
include in the scope of our review lands managed by DOI. 

[D] State has used its authority under 22 U.S.C. § 300 to exchange, 
lease, or license real property outside of the country. According to 
State, in exceptional cases, the department has relied on this 
authority to enter into long-term leases to conserve historically 
significant properties, such as the Talleyrand Building in Paris, 
France. State's authorization to sell and retain proceeds from the sale 
of real property applies to its properties located outside of the 
United States and to properties located within the United States 
acquired for an exchange with a specified foreign government. 

[E] According to State, committee reports accompanying State's 
appropriations acts routinely require the department to notify Congress 
through the reprogramming process of the specific planned use of the 
proceeds of the sale of excess property. Furthermore, State indicated 
that it routinely includes discussion of the use of proceeds from the 
sale of real property in its budget justifications and financial plans. 

[F] Because USDA's Agricultural Research Service received pilot 
authority to enter into EULs for certain properties effective June 
2008, but had not entered into any EULs during our review, we did not 
include it in the scope of our review. 

[G] We are listing the Forest Service separately from USDA because it 
has authority to sell administrative property and retain the proceeds 
from the sales, unlike the rest of USDA. 

[H] Although the Forest Service has EUL authority, it has not used that 
authority. 

[I] Under certain circumstances, VA can use the proceeds from the sale 
of former EUL property without further congressional action. See 
footnote 8. 

[End of table] 

Authorities are agency-specific and include different provisions. For 
example, while VA is authorized to enter into EULs for "underutilized" 
or "unutilized" real property, DOD is authorized to enter into EULs 
only for "nonexcess" real property.[Footnote 10] In addition, some 
agencies must follow the requirements in Title 40 of the United States 
Code and the McKinney-Vento Homeless Assistance Act before selling real 
property--and some of these steps may result in the property being 
disposed of with no proceeds--while other agencies' authorities exempt 
them from following these requirements.[Footnote 11] Congress enacted 
the McKinney-Vento Homeless Assistance Act as a comprehensive federal 
response to homelessness and enacted the public benefit conveyance 
(PBC) program as one means of disposing of surplus federal property, 
whereby state or local governments and certain tax-exempt nonprofit 
organizations can obtain surplus real property for public uses, such as 
public heath or educational facilities and public parks and 
recreational areas. GSA and VA, for example, have the authority to 
retain proceeds from the sale of real property but must, before 
offering property for sale, follow the requirements under Title 40 of 
the United States Code and the McKinney-Vento Homeless Assistance Act. 
Although DOD also has authority to retain the proceeds from the sale of 
real property, in certain cases, the department is exempt from 
following the requirements under Title 40 relating to real property 
disposition and the McKinney Act[Footnote 12]. Furthermore, four 
agencies with the authority to retain proceeds from the sale of real 
property (DOD, in certain case[Footnote 13]s; the Forest Service; 
State; and USPS) have authority to use these proceeds without further 
congressional action, while two agencies with authority to retain 
proceeds from the sale of real property, (VA for nonEUL property and 
GSA) require further congressional action before using them. Figure 1 
shows the steps that GSA must follow to sell excess real property and 
retain the proceeds. (Enclosure III illustrates the steps each agency 
must follow to sell real property.) 

Figure 1: GSA's Process for Selling Excess GSA-Controlled Real 
Property: 

[Refer to PDF for image: illustration] 

1) Public Buildings Service reports the property excess: 

2) Property is screened for use by other federal agencies; 
* If transferred to another federal agency: Proceeds–if any–go to GSA’s
Federal Buildings Fund; 
* If not transferred to another federal agency: 

3) Property is screened for use by homeless providers at no cost: 
* If conveyed for homeless use: No proceeds; 
* If not conveyed for homeless use: 

4) Property is screened for certain other public uses for up to 100 
percent discount of fair market value, and for negotiated sale to 
public entities: 
* Property conveyed as PBC or negotiated sale: Proceeds–if any–go to 
GSA’s Federal Buildings Fund; 
* Property not conveyed as PBC or negotiated sale: 

5) Property is offered for competitive public sale: 

6) Property is sold: Proceeds go to GSA’s Federal Buildings Fund for 
GSA’s real property capital needs (congressional action is necessary 
for the proceeds to be used). 

Source: GSA. 

[End of figure] 

By contrast, the Forest Service, State, and USPS do not follow the 
requirements[Footnote 14] under Title 40 of the United States Code and 
the McKinney-Vento Homeless Assistance Act when they wish to sell real 
property, both reducing the time and effort involved and eliminating 
instances in which the agency disposes of the property at a discount of 
up to 100 percent of fair market value. For example, figure 2 shows the 
steps that State must follow to sell overseas real property. 

Figure 2: State Department's Process for Selling Excess Real Property 
Located Outside of the United States: 

[Refer to PDF for image: illustration] 

1) Department of State declares property excess; 

2) Property is put on market; timing depends on market, economic, 
political, or reciprocity issues; 

3) Property is sold; 

4) Proceeds go to Department of State and are available to be spent for 
acquisition, construction, or other authorized purposes. 

Source: State Department. 

[End of figure] 

How these proceeds can be spent also varies, as described fully in 
enclosure II. Table 2 provides a summary of the steps that agencies 
must follow when selling real property and retaining proceeds. 

Table 2: Summary of Major Steps that Agencies Follow to Sell Real 
Property: 

Agency: DOD[A]; 
Property declared excess: Yes; 
Screened for use by other agencies: Yes; 
Screened for use by homeless: Yes; 
Screened for public benefit use: Yes. 

Agency: DOD[B, C]; 
Property declared excess: No; 
Screened for use by other agencies: No; 
Screened for use by homeless: No; 
Screened for public benefit use: No. 

Agency: GSA; 
Property declared excess: Yes; 
Screened for use by other agencies: Yes; 
Screened for use by homeless: Yes; 
Screened for public benefit use: Yes. 

Agency: State; 
Property declared excess: Yes; 
Screened for use by other agencies: No; 
Screened for use by homeless: No; 
Screened for public benefit use: No. 

Agency: USDA/Forest Service (for administrative sites); 
Property declared excess: No; 
Screened for use by other agencies: No; 
Screened for use by homeless: No; 
Screened for public benefit use: No. 

Agency: USPS; 
Property declared excess: Yes; 
Screened for use by other agencies: No; 
Screened for use by homeless: No; 
Screened for public benefit use: No. 

Agency: VA; 
Property declared excess: Yes; 
Screened for use by other agencies: Yes; 
Screened for use by homeless: Yes; 
Screened for public benefit use: Yes. 

Source: GAO analysis; information provided by the above agencies. 

Note: The agencies listed in this table are only those with the 
authority to retain proceeds from the sale of real property. See 
enclosure II for the specific authorities provided in this table. 

[A] 40 U.S.C. § 572. Under this authority, while the Administrator of 
GSA is authorized to dispose of DOD property, DOD is the recipient of 
the proceeds. b10 U.S.C. § 2854a. 

[C] 10 U.S.C. § 2878. 

[End of table] 

Agencies with Authority to Retain Proceeds from Sale of Real Property 
Reported Selling Property to Varying Extents and Using Proceeds for 
Property Management: 

Governmentwide data reported to the FRPP were not sufficiently reliable 
to analyze the extent to which the six agencies with authority to 
retain proceeds sold real property, due to inconsistent and unreliable 
reporting. However, these six agencies (DOD, the Forest Service, GSA, 
State, USPS, and VA) reported selling property to varying extents, with 
net proceeds ranging from $21 million to $541 million during fiscal 
years 2006 and 2007. In addition, five agencies (DOD, GSA, State, the 
Forest Service, and VA) reported using sales proceeds to manage their 
real property portfolios, such as rental of space, building operations, 
new construction and acquisition, maintenance, and repairs and 
alterations, while USPS reported depositing the proceeds into its 
general fund. 

FRPP Data on Real Property Disposal Were Unreliable: 

According to GSA officials, a data element on disposition (which 
includes disposition by sale as well as other methods) was added to the 
FRPP as of fiscal year 2006 to identify unneeded assets that have been 
removed from the FRPP inventory and to track the volume of disposals to 
support the strategic goal of right-sizing the federal real property 
inventory. However, we found inconsistent and unreliable reporting 
within the disposal data element on the method of disposal and were 
therefore unable to use the FRPP to analyze the number of sales of real 
property by agencies with the authority to retain proceeds. For 
example, the Air Force reported that in fiscal year 2006, it disposed 
of 4,397 assets by sale, as well as disposing of a number of assets by 
demolition, federal transfer, or other means. In fiscal year 2007, 
however, it reported disposing of 12,423 assets, all in the "other" 
category.[Footnote 15] Because all of its disposed assets were reported 
in the "other" category for fiscal year 2007, unlike in the prior 
fiscal year, we asked Air Force officials about the reasonableness of 
the data. Air Force officials agreed that the disposal method data 
summarized and reported in 2007 did not provide disposal information 
comparable to the level of detail provided in 2006. They said that the 
primary cause for insufficient data detail has been resolved and that 
they plan to provide better data in future reporting that more 
accurately reflects disposal methods. 

GSA officials said that every time a new data element is added to the 
FRPP, the data for that element are likely to be less reliable because 
agencies need to learn the process and determine how to provide these 
data. GSA reviews the data submitted by federal agencies and notifies 
the relevant agencies of any inconsistencies and anomalies. If an 
agency does not address the inconsistencies or anomalies, GSA will 
report these to OMB; OMB takes these into account when rating the 
agencies on their real property management initiative efforts. 
Nevertheless, these data weaknesses reduce the effectiveness of the 
FRPP as a tool to enable governmentwide comparisons of real property 
efforts, such as the effort to reduce the government's portfolio of 
unneeded property. 

Agencies with Authority to Retain Proceeds Reported Selling Real 
Property to Varying Extent: 

While we were unable to analyze the governmentwide FRPP database to 
determine the number of properties sold by agencies with authority to 
retain proceeds,[Footnote 16] we asked the six agencies that have 
authority to retain proceeds from the sale of real property to provide 
information on the net proceeds received during fiscal years 2006 and 
2007. As shown in Table 3, the sales proceeds received by individual 
agencies in our review ranged from $21 million to $541 million during 
those 2 years. The highest level of net proceeds for these 2 years was 
reported by State, largely due to the sale of a facility known as the 
Navy Annex in London for $494 million. 

Table 3: Real Property Sales Proceeds during Fiscal Year 2006 and 
Fiscal Year 2007, by Agency: 

Agency: DOD; 
FY 2006 proceeds: $14,070,949; 
FY 2007 proceeds: $41,787,312; 
FY 2006 and FY 2007 total proceeds: $55,858,261. 

Agency: GSA; 
FY 2006 proceeds: $52,049,163; 
FY 2007 proceeds: $82,218,326; 
FY 2006 and FY 2007 total proceeds: $134,267,489. 

Agency: State; 
FY 2006 proceeds: $36,035,010; 
FY 2007 proceeds: $505,145,944; 
FY 2006 and FY 2007 total proceeds: $541,180,954. 

Agency: USDA-Forest Service; 
FY 2006 proceeds: $12,600,000; 
FY 2007 proceeds: $8,700,000; 
FY 2006 and FY 2007 total proceeds: $21,300,000. 

Agency: USPS; 
FY 2006 proceeds: $91,367,745; 
FY 2007 proceeds: $201,753,000; 
FY 2006 and FY 2007 total proceeds: $293,120,745. 

Agency: VA[A]; 
FY 2006 proceeds: $22,319,702; 
FY 2007 proceeds: 0; 
FY 2006 and FY 2007 total proceeds: $22,319,702. 

Sources: DOD, GSA, State, USDA, USPS, and VA. 

[A] VA reported that it did not sell any properties through its Capital 
Asset Fund authority, which authorizes it to sell real property and 
retain the proceeds, but that it sold one property, shown in this 
table. The property, the Lakeside VA Medical Center in Chicago, was 
sold under an EUL agreement after determining that it was no longer 
needed by the agency. VA's proceeds from the sale of the Lakeside VA 
Medical Center were $50 million, which included a net present value 
rental return of $28 million received in 2005 for a 75-year EUL term 
and an additional $22 million received in 2006, reflected in this 
table, with the actual closing of the sale of the property. 

[End of table] 

Of the six agencies with the authority to sell real property and retain 
the proceeds, two (State and USPS) use in-house staff to handle the 
sales, while the other three agencies use GSA for some or all of their 
sales. Under the Federal Management Regulation, landholding agencies 
must report excess real property to GSA, which is generally responsible 
for disposing of real property unless an agency has specific or 
delegated authority to do so.[Footnote 17] Property sales handled by 
GSA are typically sold through auctions. We found that agencies with 
the authority to retain proceeds from the sale of real property had 
sold a variety of types of properties in the past several years (see 
figure 3). 

Figure 3: Examples of Recently Sold Properties by Agencies with 
Authority to Retain Proceeds: 

[Refer to PDF for image: photographs] 

Photographs of: 
* Former Army housing in Rotterdam, New York; 
* Former Forest Service property, Camp Verde, Arizona; 
* Former federal building in Colorado Springs, Colorado; 
* State Department’s former Navy Annex in London, England. 

Sources: GAO (Army Rotterdam housing, Forest Service Camp Verde, and 
Colorado Springs federal building); Department of State (London Navy 
Annex). 

[End of figure] 

The sales prices for these recently sold properties varied 
considerably. While some properties sold for tens of thousands of 
dollars, one sold for nearly $500 million. Information provided by 
agency officials on the above properties included the following: 

* State's London, England, Navy Annex building sold in 2007 for $494 
million, when the London real estate market was at its peak. State 
Department officials said the sale of this building, which was owned by 
State but previously used by the Navy, was unique because the sales 
proceeds from the Navy Annex will be used to build a new embassy in 
London, rather than used to fund worldwide priorities. State officials 
provided information on two other examples of sales that they said were 
more typical, involving the sales of former marine security guard 
quarters in Cape Town, South Africa, and Quito, Ecuador, in 2008, for 
$1.1 million and $1.8 million, respectively. The proceeds from those 
sales were deposited into the department's asset management account to 
be used for worldwide priorities. 

* The Army sold a former Army housing complex in Rotterdam, N.Y., for 
$1.8 million in 2008. The Army determined this property was excess 
because it had more housing in the area than it needed to serve its 
mission. The property, which included several apartment and other 
buildings on about 8 acres of land, was sold through GSA's online 
auction for slightly over its appraised value. 

* The Forest Service sold two of four parcels of administrative land it 
offered for sale through GSA's online auction at Camp Verde, Ariz. The 
first parcel consisted of about 1.6 acres of unimproved land in a 
residential neighborhood that was sold to private citizens in 2006 for 
$155,000. The second parcel consisted of about 119 acres of mostly 
unimproved land that was sold to the town of Camp Verde in 2008 for 
$2.4 million. The other two parcels did not sell--a fact that Forest 
Service officials attributed to a downturn in the real estate market. 

* GSA sold a federal building in Colorado Springs, Colo., for $890,000 
in 2009. The property consisted of about 1.7 acres of land and a 2-
story brick office building built in 1962. Formerly leased to the Air 
Force, the building had been vacant since December 2007. The property 
was sold through GSA's online auction. 

Agencies Reported Using Sales Proceeds Mainly for Real Property 
Portfolio Management Purposes: 

Agencies reported using sale proceeds mainly to help manage their real 
property portfolios. (Enclosure II states how agencies are authorized 
to use proceeds.) For example, a Forest Service official said that the 
Forest Service used the proceeds from the Camp Verde sale described 
above to build a new ranger station at Camp Verde. GSA indicated that 
its sales proceeds are deposited into GSA's Federal Buildings Fund and 
used for real property management purposes, such as rental of space, 
building operations, new construction and acquisition, and repairs and 
alterations. State Department officials said that the proceeds are 
collected centrally and used for priorities established by the 
department's Bureau of Overseas Buildings Operations, including 
purchasing housing and other properties, constructing new facilities, 
or rehabilitating existing facilities. USPS officials said that the 
agency deposits its proceeds from the sale of real property into its 
general fund, where they become part of USPS's funds for use for agency 
priorities. 

Authorities Affect How Agencies Manage Their Real Property Portfolio: 

Agency officials generally said that the authorities to enter into EULs 
and sell and retain sales proceeds influenced the amount of property 
that is sold and that they preferred using the authorities that were 
the least restrictive. The five agencies that do not have the authority 
to retain proceeds from the sale of real property (DOE; DOI; DOJ; NASA; 
and USDA, except for the Forest Service), indicated that they would 
favor having this authority to help manage their real property. 

Agencies with Authority for Both EUL and Retention of Sales Proceeds 
Preferred the Authority Seen as Less Restrictive or More Advantageous: 

We asked agency officials for their views on the relationship between 
having the authorities to enter into EULs or to sell real property and 
retain the sales proceeds and the amount of real property that they 
sell. Of the six agencies with the authority to retain the proceeds 
from the sale of real property, officials at five agencies (the Forest 
Service, GSA, State, USPS, and VA) said that this authority is a strong 
incentive to sell real property, while officials at one agency, DOD, 
which had the authority to enter into EULs without offering the 
properties to the homeless and other federal agencies--said that the 
authority to retain proceeds is not a strong incentive to sell real 
property. Officials from five agencies that had authorities to enter 
into EULs and to retain the proceeds from the sale of real property-- 
GSA, DOD, USDA's Forest Service, USPS, and VA--all stated preferences 
for the authority seen as less restrictive or more financially 
advantageous to the agency.[Footnote 18] State, which also has the 
authority to enter into EULS and retain the proceeds from the sale of 
real property, indicated that retaining sales proceeds is the more 
critical part of its program, but also foresees increasing 
opportunities for EULs in the future. 

DOD and VA officials said that because EULs provide greater incentives, 
the agencies place greater emphasis on entering into EULs, compared to 
real property sales. DOD officials emphasized the potential of EULs to 
serve the department's mission, while stating that its authority to 
retain proceeds from the sale of real property was not a strong 
incentive to sell unneeded real property. For example, headquarters DOD 
officials said that there was little emphasis or potential at DOD for 
selling excess real property outside of the BRAC process, in part 
because that process was the department's major initiative to 
consolidate its real property and had largely taken care of the 
opportunity to dispose of DOD real property. Disincentives to selling 
real property, according to DOD officials, include the length of time 
it can take, since such property must first be offered to other federal 
agencies, the homeless, and other public benefit uses, and the fact 
that much DOD property cannot be sold to a private entity for security 
reasons. 

In contrast, DOD officials emphasized the potential for EULs to 
maximize the utility and value of its real property and to serve its 
mission needs, and each service has a Web site focused on its existing 
and proposed EULs. In prior work, we found that EULs are a land use 
planning tool for DOD that Army and Air Force are using to gain in-kind 
services.[Footnote 19] DOD is authorized to enter into EULs only for 
nonexcess property, and officials made the distinction between DOD's 
authority to enter into EULs for nonexcess property and its authority 
to sell and retain proceeds from the sale of excess real property. 
However, it was not always clear how DOD determined whether properties 
were suitable for EULs. For example, Army officials said that the Army 
considers EULs for properties it would not consider excess because the 
property creates a buffer zone or security perimeter for an 
installation. However, the Army entered into a long-term EUL agreement 
for a mixed-used development of hotel and retail space at Redstone 
Arsenal, Ala., on Army property that lies outside of the installation's 
fence and gate. Army officials said that they see the use as compatible 
with a buffer zone and wanted to maintain some control over the 
property because a training site is nearby. 

Similarly, Air Force officials said that unutilized property may be 
nonexcess but suitable for an EUL because it is needed for a buffer 
zone or to avoid encroachment. However, it has proposed a long-term EUL 
agreement for a hotel/resort development at Emerald Breeze, on 17 acres 
of Air Force property on an island off the coast of Florida that is not 
directly adjacent to an installation. Air Force officials said that 
every EUL agreement states that the lease can be terminated at any time 
for a national emergency. This allows the Air Force more flexibility 
than excessing and selling the property, at which point it would lose 
the right to reacquire it during a national emergency. In addition, an 
Air Force official said that under the terms of excessing real 
property, no property is declared excess until a determination has been 
made that it is excess. Therefore, until that determination is made, 
the Air Force does not consider that property excess, and it may 
consider an EUL for that property. 

According to VA officials, VA places greater emphasis on entering into 
EULs, compared to real property sales, in part because VA can enter 
into EULs with fewer restrictions than under its Capital Asset Fund 
(CAF) authority to sell and retain proceeds of real property.[Footnote 
20] For example, VA can enter into an EUL without first screening the 
property for homeless use, as it must for property it wishes to sell 
under its CAF authority. Moreover, VA has the authority to retain and 
spend proceeds from EULs without the need for further congressional 
action, while proceeds retained under CAF authority are subject to 
further congressional action.[Footnote 21] In addition, VA is 
authorized to use EUL proceeds for purposes unrelated to real property, 
such as providing health care services, which are not permitted under 
VA's CAF authority. VA officials said that in addition, EULs allow VA 
to realign its asset portfolio in a way that supports its mission by 
using EULs to obtain facilities, services, in-kind consideration, or 
revenue for VA requirements that would otherwise be unavailable or 
unaffordable. The officials added that local and state government, 
veterans groups, private partners, and nonprofit entities and other 
community members potentially benefit when these properties are 
redeveloped to provide new services and economic opportunities to 
veterans and the community. VA produces an annual report that discusses 
and tracks the benefits of its active EULs for the past fiscal year. 

VA officials said that although they believe retaining proceeds from 
the sale of real property is a strong incentive, other factors, such as 
the needs of veterans' service organizations and the community that are 
complimentary to VA's mission, are of equal importance. This review and 
past work found that VA has used authorities, such as EULs, to provide 
services for veterans, such as homeless housing, drug rehabilitation, 
and childcare, and to generate revenue. For example, in 2006, at Fort 
Howard, Md., VA entered into an EUL to use nearly 300,000 square feet 
of vacant space to develop a retirement community, with priority 
placement for veterans. Conversely, in another EUL, VA is leasing 
property in Hillsborough, N.J., called Veterans Industrial Park to a 
company that subleases the property to a variety of commercial 
interests needing warehouse or light manufacturing space, as well as 
the county government. VA officials said that VA did not consider 
selling this property because, in 1999, when the agency entered into 
the EUL agreement, it did not have the authority to retain the proceeds 
from the sale of real property. In addition, GSA had a similar property 
nearby that the agency had been unable to sell. Other than a small area 
on the property that is used for VA services to collect and distribute 
military clothing to homeless veterans, the property lessees are 
commercial renters who are not providing any direct services to VA. 
However, VA officials said that it considers such EULs to be in the 
agency's interest, as VA is receiving about $300,000 to $390,000 a year 
from rental income that it can use for the agency's priorities[Footnote 
22]. (See figure 4 for photographs of this property.) 

Figure 4: Veterans Industrial Park, Which Is Generating Lease Payments 
to VA: 

[Refer to PDF for image: 2 photographs] 

Source: GAO. 

[End of figure] 

GSA stated that while it has the authority to enter into EULs and sell 
and retain the proceeds from real property sales, it believes that 
budget scorekeeping rules under OMB Circular A-11 limit the agency's 
ability to maximize usage of its EUL authority. In contrast, GSA 
officials said that the agency's ability to retain proceeds is a strong 
incentive to dispose of excess real property.[Footnote 23] From fiscal 
years 2002 to 2007, it reported 271 assets as excess, helping to avoid 
more than $600 million of repair and alterations liability and 
providing GSA with almost $140 million of proceeds, which GSA uses as 
reinvestment funds for its portfolio of core assets. GSA officials said 
that it is unlikely that sales proceeds have been seen as an offset to 
the following year's appropriation. According to GSA officials, the 
agency's sale of a 1.9 million square-foot facility known as the Middle 
River Depot in Baltimore County, Md., is a good illustration of how 
retention of proceeds can motivate GSA to dispose of excess real 
property and obtain the best value for the government from its real 
property sales. 

The Middle River Depot, a large warehouse used to build B-26 bombers in 
World War II, with some associated buildings and land, sold for $37.5 
million in 2006. In this case, GSA decided there was no government need 
for the property, and Congress passed legislation in 2004 for GSA to 
sell this property and keep the proceeds.[Footnote 24] The main 
challenges in marketing and selling the property were community 
concerns and the state's insistence that the warehouse be covered by a 
historic easement.[Footnote 25] GSA officials said that GSA expended 
considerable time and effort into overcoming these challenges, such as 
negotiating with the Maryland Historical Trust until it came to an 
understanding of the basic alterations that would and would not be 
permitted to the building. GSA subsequently provided this information 
to prospective bidders. GSA officials said that the agency was 
motivated to sell the property at the highest possible price because 
GSA was authorized to retain the proceeds (see figure 5). 

Figure 5: Middle River Depot, Md., Sold by GSA in 2006: 

[Refer to PDF for image: 2 photographs] 

Source: GAO. 

[End of figure] 

Officials at USPS, which has authority to enter into EULs and sell real 
property and retain proceeds, said that the Postal Service prefers to 
sell or exchange unneeded property. Officials said that USPS's 
authority provides the agency with a strong incentive to actively sell 
or exchange underutilized property that has a high value. Because of 
the relatively streamlined process to sell real property, compared to 
other agencies, and its ability to retain and use sales proceeds for 
any USPS purpose without further congressional action, it has little 
incentive to enter into EULs and rarely does so. Three former USPS 
properties that were sold or exchanged in the past few years were 
initiated by other parties wanting to purchase the building or land. 
For example, the state of New York approached USPS in the 1990s about 
purchasing the Farley Building in Manhattan, a historic, 1.4 million- 
square-foot building across the street from Pennsylvania Station (see 
figure 6) to redevelop the building into a new train station to be 
named the Moynihan Station. USPS sold the Farley Building in 2007 and 
is in the process of consolidating its operations into two other 
existing buildings and 250,000 square feet of leaseback space in the 
Farley building. According to USPS officials, the sale of the Farley 
building generated financial proceeds to USPS,[Footnote 26] reduced 
deferred maintenance costs, consolidated USPS operations into less 
space overall, and resulted in reduced operating costs. In the other 
two cases, in Denver and Scottsdale, Ariz., USPS exchanged old post 
offices with various parties (the city of Denver and a health care 
company) that sought the postal property and financed new post offices. 
In both cases, according to USPS's analysis, USPS benefited financially 
from the transaction, as well as gaining modern and more efficient 
facilities in return for older ones. 

Figure 6: Farley Building in New York City, Sold by USPS in 2007: 

[Refer to PDF for image: 2 photographs] 

Source: GAO. 

[End of figure] 

State Department officials also told us that the authority to retain 
proceeds is an incentive to dispose of excess real property because it 
allows the agency to direct resources from the sale of real property to 
other pressing facilities needs. Although further congressional action 
is not needed before State may use proceeds from the sales of real 
property, the department notifies Congress about its intended use of 
the proceeds in its budget justifications and financial plans. 

Officials at the Forest Service, which has authorities to enter into 
EULs and retain proceeds from the sale of real property, said that the 
agency's authority to retain proceeds is a strong incentive to sell 
real property. Officials at this agency described active efforts to 
analyze their portfolios to find opportunities to sell unneeded real 
property. Forest Service officials said that since it received 
authority to retain proceeds in 2001, it has disposed of more 
properties than before it had the authority.[Footnote 27] The Forest 
Service officials said that the agency has benefited in two primary 
ways from this authority. First, the Forest Service has used proceeds 
to help address a large backlog of deferred maintenance needs. Second, 
because it may use proceeds to construct new ranger stations, they said 
this authority has helped the Forest Service realign its infrastructure 
to better meet its current mission. Forest Service officials said that 
a major reason that the authority to keep the proceeds has functioned 
as an incentive is that the Forest Service's policy is to use proceeds 
for local or regional priorities where the property is sold. A Forest 
Service site in Sedona, Ariz., illustrates these benefits. The Forest 
Service sold a property that had been used as a ranger station, along 
with some related buildings and land, for $8.4 million to build a new 
ranger station on another site (see figure 7). The previous Forest 
Service ranger station had significant deferred maintenance needs and 
was on a side street with little traffic in the town of Sedona. 
According to a Forest Service official, since the new ranger station 
opened along the main highway to Sedona in April 2008, average monthly 
visits by the public to the ranger station have increased 
significantly. 

Figure 7: New Forest Service Ranger Station in Sedona, Ariz., Funded by 
Sale of Another Property: 

[Refer to PDF for image: 2 photographs] 

Source: GAO. 

[End of figure] 

The Forest Service has also sold properties with lower real estate 
values, including one in Estes Park, Colo., that was sold in August 
2008 for $440,000. According to a Forest Service official, the Forest 
Service no longer ran an office out of Estes Park and did not need the 
property. In addition, the property had significant maintenance needs. 
Forest Service officials said that the biggest challenge regarding the 
sale of this property was the downturn in the housing market, and that 
the agency faces a similar challenge in selling many other properties 
under such economic conditions. Even so, the Forest Service considers 
the disposition a success because it no longer has to maintain this 
unneeded property and plans to use the proceeds for high-priority 
deferred maintenance needs. 

Agencies without Authority to Retain Proceeds from Real Property Sales 
Provided Mixed Responses on Whether Such Authority Would Be a Strong 
Incentive: 

Officials at the five agencies we contacted that do not have the 
authority to retain proceeds from the sale of real property (DOE; DOI; 
DOJ; NASA; and USDA, except for the Forest Service) provided mixed 
responses when asked about the extent to which such an authority would 
be an incentive to sell more real property. Officials at the five 
agencies said their agencies would like to have expanded authorities 
with which to manage their real property portfolio, including the 
authority to enter into EULs and retain the proceeds from the sale of 
real property. However, officials at two of those agencies said that 
due to challenges such as the security needs or remote locations of 
most of their properties, it was unlikely there would be a significant 
number of real properties that were appropriate to sell. 

One challenge that agencies face in disposing of real properties is 
maintaining them until they can be sold. We visited a former USDA 
Agricultural Research Service laboratory in Phoenix that was for sale. 
The laboratory was vacated in January 2006 when the staff moved to 
another location. During our visit, we observed that property had been 
vandalized and copper from the buildings and part of a greenhouse had 
been stolen. While GSA is marketing and attempting to sell the 
property, USDA remains responsible for maintaining it until May 1, 
2009, before responsibility is transferred to GSA under certain 
conditions. 

Figure 8: Former USDA Laboratory for Sale in Phoenix: 

[Refer to PDF for image: 2 photographs] 

* Vandalized USDA laboratory; 
* Destroyed greenhouse. 

Source: GAO. 

[End of figure] 

Agencies may also face challenges in exercising their EUL authority. 
NASA, one agency that does not have the authority to retain proceeds 
from the sale of real property, has had the authority to enter into 
EULs at two centers; as of December 31, 2008, a new agencywide 
authority gives NASA the ability to enter into EULs. In recent work, we 
found that while NASA has realized some EUL-related financial benefits, 
among other things--most of which would not have been realized by NASA 
without this authority--the agency did not have adequate controls in 
place to ensure accountability and transparency and to protect the 
government.[Footnote 28] NASA accepted our recommendations and 
developed agencywide policy for the administration of EULs and for the 
financial management of the revenue derived from EULs.[Footnote 29] 
NASA officials said that they use EULs, rather than selling the 
property, when the agency believes the property may be needed in the 
future or wants to maintain some control over the property. 

Agency Comments and Our Evaluation: 

We requested comments on a draft of this report from the Administrator 
of the General Services Administration; the Administrator of the 
National Aeronautics and Space Administration; the Attorney General; 
the Director of the Office of Management and Budget; the Postmaster and 
Chief Executive Officer of the United States Postal Service; the 
Secretary of Agriculture; the Secretary of Defense; the Secretary of 
Energy; the Secretary of the Interior; the Secretary of State; and the 
Secretary of Veterans Affairs. 

DOE indicated that it agreed with the report's findings and noted that 
it is important to emphasize that the EUL authority provided to the 
department under the "Hall Amendment," 42 U.S.C. § 7256(c) is very 
limited in scope. DOE also indicated that it would greatly benefit from 
a more expansive and broad EUL authority, similar to the authorities 
used by DOD. In addition, DOE indicated that, with the increased 
emphasis on renewable energy as contained in the Energy Policy Act of 
2005, legislation that provides expanded authorities to the department 
would provide the flexibility and tools with which to achieve the goals 
that are vital to the nation. GSA indicated that it agreed with the 
report's findings. DOI indicated that the report was a fair summation 
of the authorities, policies and complex challenges associated with the 
disposal and transfer of lands and constructed assets. DOE, GSA, NASA, 
OMB, State, USDA, and VA provided technical clarifications, which we 
incorporated throughout the report as appropriate. DOD, DOJ, and USPS 
provided no comments. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to the 
appropriate congressional committees; the Administrator of the General 
Services Administration; the Administrator of the National Aeronautics 
and Space Administration; the Attorney General; the Director of the 
Office of Management and Budget; the Postmaster and Chief Executive 
Officer of the United States Postal Service; the Secretary of 
Agriculture; the Secretary of Defense; the Secretary of Energy; the 
Secretary of the Interior; the Secretary of State; and the Secretary of 
Veterans Affairs. 

In addition, this report will be available at no charge on GAO's Web 
site at [hyperlink, http://www.gao.gov]. 

If you or your staffs have any questions regarding this report, please 
contact me at (202) 512-2834 or wised@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. Key contributors to this report are 
listed in enclosure IV. 

Signed by: 

David Wise:
Director, Physical Infrastructure Issues: 

Enclosures (4): 

[End of section] 

Enclosure I: Scope and Methodology: 

Our objective was to review how agencies are using their disposal 
authorities. To accomplish this, we addressed (1) what authorities the 
10 largest real property holding agencies have to enter into enhanced 
use leases (EUL) or retain proceeds from the sale of real property; (2) 
the extent to which agencies with authority to retain proceeds sold 
real property and how they have used the proceeds; and (3) the 
relationship, if any, between agencies having the authority to enter 
into EULs or retain sales proceeds and the amount of real property that 
they retained or sold. 

To determine what authorities the 10 largest real property holding 
agencies have regarding EULs and retention of proceeds from the sale of 
real property, we first identified the 10 agencies that reported 
holding real property with the highest values to the Federal Real 
Property Profile (FRPP) in fiscal year 2007. These 10 agencies include 
the Department of Agriculture (USDA), Department of Defense (DOD), 
Department of Energy (DOE), Department of the Interior (DOI), 
Department of Justice (DOJ), Department of State (State), Department of 
Veterans Affairs (VA), General Services Administration (GSA), National 
Aeronautics and Space Administration (NASA), and the United States 
Postal Service (USPS). For the purposes of this review, the term "real 
property" does not include real property that DOD has or is planning to 
dispose of through the Base Realignment and Closure Act (BRAC) process, 
[Footnote 30] lands managed by DOI or the Forest Service (except for 
Forest Service administrative sites), and transfers of individual 
properties specifically authorized by Congress. We then conducted legal 
research and interviewed officials at those 10 agencies regarding their 
authorities to enter into EULs and sell and retain the proceeds from 
the sales of real property. We also reviewed agencies' asset management 
plans and real property management policies on issues involving 
excessing properties, selling properties, and entering into EULs. In 
addition, we reviewed GSA guidance for federal agencies on declaring 
excess and selling real property. Furthermore, we reviewed prior GAO 
reports on real property management, leasing, and selling federal real 
property. 

To determine to what extent agencies with authority to retain proceeds 
sold real property and how they have used the proceeds, we first 
obtained and analyzed real property disposition data from the FRPP 
regarding the 10 agencies. We also interviewed officials from the 
Office of Management and Budget (OMB) about the reliability of the 
disposition information contained in the FRPP. After we determined that 
the FRPP disposition data were unreliable for our purposes, we obtained 
information on the amount of proceeds from the sales of real property 
received during fiscal years 2006 and 2007 from the six agencies that 
are authorized to retain proceeds. We did not independently validate 
the accuracy of the sales proceeds information that the agencies 
provided because we considered the data to be sufficiently reliable for 
our purposes, which was focused more on whether the agencies sold any 
real property and what they used the proceeds for, rather than an 
accurate accounting of the funds received for those properties. In 
addition, we interviewed officials from the 10 agencies about the 
processes that they follow in disposing of real property and their 
recent real property sales, including the reasons for selling the 
properties, how they were marketed, and the challenges faced. 

To determine the relationship, if any, between agencies having the 
authority to enter into EULs or retain sales proceeds and the amount of 
real property that they retained or sold, we interviewed agency 
officials about the factors they considered in deciding whether or how 
to dispose of unneeded real property, including the authorities 
available. We also visited a VA EUL site in Hillsborough, N.J., and 
interviewed officials from the property management and leasing 
companies about the agreement and how the property was being used. 

To help address the second and third research questions, we also 
visited federal properties that had been sold or were for sale in Camp 
Verde, Ariz.; Colorado Springs, Colo.; Denver; Estes Park, Colo.; 
Glendale, Ariz.; Guilderland, N.Y.; Loveland, Colo.; Middle River, Md.; 
New York; Peoria, Ariz., Rotterdam, N.Y.; Scotia, N.Y.; Scottsdale, 
Ariz.; Sedona, Ariz.; and Tucson, Ariz. During the site visits, we 
interviewed officials involved in the sales, including officials from 
the agencies that held the properties; GSA; and, when available, the 
buyers. We also obtained information from the agencies that were 
authorized to retain the sales proceeds on how they used the proceeds. 

[End of section] 

Enclosure II: Selected Real Property Authorities and Retention of 
Proceeds Authorities for Major Real Property Holding Agencies: 

Real property holding agency: DOD[A]; 
Authority: Leases of Non-Excess Property of Military Departments; 10 
U.S.C. § 2667; 
Description of authority: The Secretary of a military department is 
authorized to lease nonexcess real property under the control of the 
department that is not needed for public use if the Secretary considers 
the lease to be advantageous to the United States and upon such terms 
that will promote the national defense or be in the public interest. 
The term of the lease may not be more than 5 years, unless the 
Secretary determines the term should be longer to promote the national 
defense or to be in the public interest. Lease payments shall be in 
cash or in-kind consideration for an amount not less than fair market 
value. In-kind consideration includes maintenance, protection, 
alteration, repair, or environmental restoration of property or 
facilities; construction of new facilities; providing facilities; or 
providing or paying for utility services. 

Real property holding agency: DOD; 
Authority: Retention of Proceeds/Leases of Non-Excess Property of 
Military Departments; 10 U.S.C. § 2667; 
Description of authority: Proceeds from leases of a military department 
are deposited into a special account in the Treasury and are available 
to the Secretary of that military department for such activities as 
maintenance, protection, alteration, or environmental restoration of 
property or facilities; construction of new facilities; lease of 
facilities; or payment of utility services. At least 50 percent of the 
proceeds received shall be available for activities at the military 
installations where the proceeds are derived. Prior to fiscal year 
2005, any amounts deposited in a special account from the disposition 
of property were subject to expenditure, as provided in an 
appropriation act. Beginning in fiscal year 2005, any amounts deposited 
into a special account from the disposition of property are 
appropriated and available for expenditure.[B] 

Real property holding agency: DOD; 
Authority: Conveyance of Damaged or Deteriorated Military Family 
Housing; 10 U.S.C. § 2854a; 
Description of authority: The Secretary concerned is authorized to 
convey any family housing facility, including the real property 
associated with the facility, which due to damage or deterioration is 
in a condition that is uneconomical to repair. The person to whom the 
facility is conveyed shall pay an amount equal to the fair market value 
of the facility conveyed, including any real property conveyed along 
with the facility.[C] 

Real property holding agency: DOD; 
Authority: Retention of Proceeds/Conveyance of Damaged or Deteriorated 
Military Family Housing; 10 U.S.C. § 2854a; 
Description of authority: Proceeds of any conveyance of a damaged or 
deteriorated military family housing facility shall be credited to the 
Department of Defense Housing Improvement Funds, 10 U.S.C. § 2883, and 
shall be available, without any further appropriation, to construct 
family housing units to replace the family housing facility conveyed 
under this section; to repair or restore existing military family 
housing; and to reimburse the Secretary concerned for the costs 
incurred by the Secretary in conveying the family housing facility. 

Real property holding agency: DOD; 
Authority: Conveyance or Lease of Existing Property and Facilities; 10 
U.S.C. § 2878; 
Description of authority: The Secretary concerned is authorized to 
convey or lease property or facilities, including ancillary supporting 
facilities to eligible entities at such consideration the Secretary 
concerned considers appropriate for the purposes of the alternative 
authority for acquisition and improvement of military housing and to 
protect the interests of the United States.[D] 

Real property holding agency: DOD; 
Authority: Retention of Proceeds/Conveyance or Lease of Existing 
Property and Facilities; 10 U.S.C. § 2883;
Description of authority: Proceeds from the conveyance or lease of 
property or facilities under 10 U.S.C. § 2878 shall be credited to the 
Department of Defense Housing Improvement Funds. Proceeds may be used 
to carry out activities with respect to the alternative authority for 
the acquisition and improvement of military housing, including 
activities required in connection with the planning, execution, and 
administration of contracts subject to such amounts as provided in 
appropriation acts. 

Real property holding agency: DOD; 
Authority: General Services Administration's (GSA) Disposal of Real 
Description of authority: Property Under a Military Department's 
Control that is Excess to the Department's Needs; 40 U.S.C. § 572; 
The Administrator of GSA is authorized to dispose of property under the 
control of a military department that is not subject to closure or 
realignment and is excess to the department's needs.[E] 

Real property holding agency: DOD; 
Authority: Retention of Proceeds/GSA's Disposal of Real Property Under 
a Military Department's Control that is Excess to the Department's 
Needs; 40 U.S.C. § 572; 
Description of authority: Proceeds from the disposition of the property 
are deposited into a special account in the Treasury, less expenses 
incurred by GSA for the disposition. Fifty percent of the proceeds are 
available for facility maintenance and repair or environmental 
restoration at the military installation where the property was 
located, and 50 percent of the proceeds are available for facility 
maintenance and repair or for environmental restoration by the military 
department that had jurisdiction over the property. Prior to fiscal 
year 2005, any amounts deposited into a special account from the 
disposition of property were subject to expenditure, as provided in an 
appropriation act. Beginning in fiscal year 2005, any amounts deposited 
in a special account from the disposition of property are appropriated 
and available for expenditure.[F] 

Real property holding agency: DOE; 
Authority: Leasing of Excess Property; 42 U.S.C. § 7256; 
Description of authority: The Secretary of Energy is authorized to 
lease excess real property located at a DOE facility that is to be 
closed or reconfigured and is not needed by DOE at the time the lease 
is entered into if the Secretary considers the lease to be appropriate 
to promote national security or is in the public interest. The term of 
the lease may be up to 10 years, with an option to renew the lease for 
another 10 years, if the Secretary determines that a renewal of the 
lease will promote national security or be in the public interest. 
Lease payments may be in cash or in-kind consideration for an amount 
less than fair market value. In kind consideration may include services 
relating to the protection and maintenance of the leased property. 

Real property holding agency: DOE; 
Authority: Retention of Proceeds/Leasing of Excess Property; 42 U.S.C. 
§ 7256; 
Description of authority: To the extent provided in advance in 
appropriations acts, the Secretary is authorized to use the funds 
received as rents to cover administrative expenses of the lease, 
maintenance and repair of the leased property, or environmental 
restoration activities at the facility where the leased property is 
located. 

Real property holding agency: GSA; 
Authority: Disposition of Real Property; 40 U.S.C. § 543; 
Description of authority: The Administrator of GSA is authorized to 
dispose of surplus real property by sale, exchange, lease, permit, or 
transfer for cash, credit, or other property. 

Real property holding agency: GSA; 
Authority: Conveyance of Property; Consolidated Appropriations Act of 
2005, P.L. No. 108-447, § 412, 118 Stat. 2809, 3259 (2004); 
Description of authority: The Administrator of GSA, notwithstanding any 
other provision of law, is authorized to convey by sale, lease, 
exchange, or otherwise, including through leaseback arrangements, real 
and related personal property, or interests therein. 

Real property holding agency: GSA; 
Authority: Retention of Proceeds/Conveyance of Property Consolidated 
Appropriations Act of 2005, P.L. No. 108-447, § 412, 118 Stat. 2809, 
3259 (2004); 
Description of authority: Net proceeds from the disposition of real 
property are deposited in GSA's Federal Buildings Fund (FBF) and are 
used for GSA real property capital needs to the extent provided in 
appropriations acts. 

Real property holding agency: NASA; 
Authority: Enhanced Use Lease Real Property Demonstration; 42 U.S.C. § 
2459j; 
Description of authority: The Administrator of NASA is authorized to 
enter into a lease agreement with any person or entity, including 
federal, state, or local governments, with regard to any real property 
at two NASA centers. The lease shall be for fair market value and 
payments may be in cash. Prior to December 31, 2008, NASA could have 
accepted for lease payments in-kind consideration such as construction, 
maintenance, or improvement of facilities, or providing services to 
NASA such as launch and payload processing services.[G] 

Real property holding agency: NASA; 
Authority: Retention of Proceeds/Enhanced Use Lease Real Property 
Demonstration; 42 U.S.C. § 2459j; 
Description of authority: Cash consideration received for the lease is 
to be used to cover the full costs to NASA in connection with the lease 
and shall remain available until expended. Thirty-five percent of any 
remaining cash shall be deposited in a capital asset account available 
for maintenance, capital revitalization, and improvements of real 
property assets under the jurisdiction of the Administrator and shall 
remain available until expended. The remaining 65 percent of the cash 
shall be available to the respective center or facility engaged in the 
lease of nonexcess real property and shall remain available until 
expended for maintenance, capital revitalization, and improvements of 
real property assets at the respective center or facility, subject to 
the concurrence of the Administrator. 

Real property holding agency: NASA; 
Authority: Lease of Non-Excess Property; 42 U.S.C. § 2459j; 
Description of authority: Effective December 31, 2008, the 
Administrator of NASA is authorized to enter into a lease agreement 
with any person or entity, including federal, state, or local 
governments, with regard to any nonexcess real property under the 
jurisdiction of the Administrator. The lease shall be for cash 
consideration of the fair market value as determined by the 
Administrator.[H] 

Real property holding agency: NASA; 
Authority: Retention of Proceeds/Lease of Non-Excess Property; 42 
U.S.C. § 2459j; 
Description of authority: Cash consideration received for the lease is 
to be used to cover the full costs to NASA in connection with the lease 
and shall remain available until expended. Thirty-five percent of any 
remaining cash shall be deposited into a capital asset account 
available for maintenance, capital revitalization, and improvements of 
real property assets under the jurisdiction of the Administrator and 
shall remain available until expended. The remaining 65 percent of the 
cash shall be available to the respective center or facility engaged in 
the lease of non-excess real property and shall remain available until 
expended for maintenance, capital revitalization, and improvements of 
real property assets at the respective center or facility, subject to 
the concurrence of the Administrator. Effective December 31, 2008, no 
funds may be used for daily operating costs. 

Real property holding agency: State; 
Authority: Disposition of Property; 22 U.S.C. § 300; 
Description of authority: The Secretary of State is authorized to sell, 
exchange, lease, or license any property or property interest acquired 
in foreign countries for diplomatic and consular establishments. 

Real property holding agency: State; 
Authority: Retention of Proceeds/Disposition of Property; 22 U.S.C. § 
300; 
Description of authority: Proceeds from the disposition of properties 
are applied toward acquisition, construction, or other purposes 
authorized by this chapter; Foreign Service Buildings; or deposited 
into the Foreign Service Buildings Funds, as in the judgment of the 
Secretary may best serve the government's interest. 

Real property holding agency: USDA; 
Authority: Enhanced Use Lease Authority Pilot Program; 7 U.S.C. § 3125a 
note[I]; 
Description of authority: The Secretary of Agriculture is authorized to 
establish a pilot program and lease nonexcess real property at the 
Beltsville Agricultural Research Center and the National Agricultural 
Library to any individual or entity, including agencies or 
instrumentalities of State or local governments, if the Secretary 
determines that the lease is consistent with, and will not adversely 
affect, the mission of the agency administering the property; will 
enhance the use of the property; will not permit any portion of the 
property or facility to be used for the public retail or wholesale sale 
of merchandise or residential development; will not permit the 
construction or modification of facilities financed by nonfederal 
sources to be used by an agency, except for incidental use; and will 
not include any property or facility required for any agency purpose 
without prior consideration of the needs of the agency. Consideration 
for any lease shall be for fair market value and for cash. The 
Secretary is authorized to enter into leases until June 18, 2013, and 
the term of the lease shall not exceed 30 years. 

Real property holding agency: USDA; 
Authority: Retention of Proceeds/Enhanced Use Lease Authority Pilot 
Program; 7 U.S.C. § 3125a note; 
Description of authority: Consideration for leases shall be deposited 
in a capital asset account, which is available until expended, without 
further appropriation, for maintenance, capital revitalization, and 
improvements to the department's properties and facilities at the 
Beltsville Agricultural Research Center and the National Agricultural 
Library. 

Real property holding agency: USDA-Forest Service; 
Authority: Conveyance of Forest Service Administrative Sites; 16 U.S.C. 
§ 580d note[J]; 
Description of authority: The Secretary of Agriculture is authorized to 
convey administrative sites of 40 acres or less under the Secretary's 
jurisdiction by sale, lease, exchange, or combination of sale and 
exchange. An administrative site is defined as a facility or 
improvement, including curtilage, that was acquired or is used 
specifically for purposes of administration of the National Forest 
System (NFS); any federal land associated with a facility or 
improvement that was acquired or specifically used for purposes of 
administration of Forest Service activities and underlies or abuts the 
facility or improvement; or not more than 10 isolated, undeveloped 
parcels per fiscal year of not more than 40 acres each that were 
acquired or used for purposes of administration of Forest Service 
activities, but are not being so utilized such as vacant lots outside 
of the proclaimed boundary of a unit of NFS. This conveyance authority, 
which would have expired on September 30, 2008, was extended until 
March 6, 2009.[K] 

Real property holding agency: USDA-Forest Service; 
Authority: Retention of Proceeds/Conveyance of Forest Service 
Administrative Sites; 16 U.S.C. § 580d note; 
Description of authority: Proceeds from the conveyance of 
administrative sites are available to the Secretary of Agriculture, 
until expended and without further appropriation, to pay any necessary 
and incidental costs in connection with the acquisition, improvement, 
maintenance, reconstruction, or construction of a facility or 
improvement for the NFS, and the conveyance of administrative sites, 
including commissions or fees for brokerage services. 

Real property holding agency: USPS; 
Authority: Real Property Authorities; 39 U.S.C. § 401(5); 
Description of authority: The Postal Service is authorized to acquire 
in any legal manner, real property or any interest therein, as it deems 
necessary or convenient in the transaction of its business and to hold, 
maintain, sell, lease, or otherwise dispose of such property or any 
interest therein. 

Real property holding agency: USPS; 
Authority: Real Property Authorities; 39 U.S.C. § 401(6); 
Description of authority: The Postal Service is authorized to 
construct, operate, lease, and maintain buildings, facilities, or 
equipment, and to make other improvements on any property owned or 
controlled by it. 

Real property holding agency: USPS; 
Authority: Retention of Proceeds/Real Property Authorities; 39 U.S.C. 
§§ 2003 and 2401; 
Description of authority: Proceeds are deposited into the Postal 
Service Fund and remain available to the Postal Service without fiscal 
year limitation to carry out the purposes, functions, and powers 
authorized by Title 39, Postal Service. All revenues received by the 
Postal Service are appropriated to the Postal Service. 

Real property holding agency: VA; 
Authority: Transfer Authority - Capital Asset Fund; 38 U.S.C. § 8118; 
Description of authority: The Secretary of VA is authorized to transfer 
real property under VA's control or custody to another department or 
agency of the United States, to a state or political subdivision of a 
state, or to any public or private entity, including an Indian tribe 
until November 30, 2011. The property must be transferred for fair 
market value, unless it is transferred to a homeless provider. Property 
under this authority cannot be disposed of until the Secretary 
determines that the property is no longer needed by the department in 
carrying out its functions and is not suitable for use for the 
provision of services to homeless veterans by the department under the 
McKinney-Vento Act or by another entity under VA's EUL authority. 

Real property holding agency: VA; 
Authority: Retention of Proceeds/Transfer Authority; 38 U.S.C. § 8118; 
Description of authority: Proceeds from the transfer of real property 
are deposited into the VA Capital Asset Fund and, to the extent 
provided in advance in appropriations acts, may be used for property 
transfer costs such as demolition, environmental remediation, and 
maintenance and repair; costs associated with future transfers of 
property under this authority; costs associated with enhancing medical 
care services to veterans by improving, renovating, replacing, 
updating, or establishing patient care facilities through minor 
construction projects; and costs associated with the transfer or 
adaptive use of property that is under the Secretary's jurisdiction and 
listed on the National Register of Historic Places. 

Real property holding agency: VA; 
Authority: Enhanced Used Leases; 38 U.S.C. §§ 8161-8169; 
Description of authority: The Secretary of VA is authorized to enter 
into leases for up to 75 years with public and private entities for 
underutilized and unutilized real property that is under the 
Secretary's jurisdiction or control. EULs shall be for "fair 
consideration," (i.e., cash and/or in-kind consideration, such as 
construction, repair, or remodeling of department facilities); 
providing office space, storage, or other usable space; and providing 
good or services to the department. The authority to enter into EULs 
terminates on December 31, 2011. 

Real property holding agency: VA; 
Authority: Retention of Proceeds/Enhanced Use Leases; 38 U.S.C. § 8165; 
Description of authority: Expenses incurred by the Secretary of VA in 
connection with EULs will be deducted from the proceeds of the lease 
and may be used to reimburse the account from which the funds were used 
to pay such expenses. The proceeds can be used for any expenses 
incurred in the development of additional EULs. Remaining funds shall 
be deposited into the VA Medical Care Collections Fund (see authority 
below for additional uses of EUL proceeds). 

Real property holding agency: VA; 
Authority: Retention of Proceeds/Enhanced Use Lease Property; 
Consolidated Security, Disaster Assistance, and Continuing 
Appropriations Act of 2009, P.L. No. 110-329, § 213, 122 Stat. 3574, 
3711 (2008); 
Description of authority: At the Secretary's discretion, proceeds or 
revenues derived from EUL activities, including disposal, may be 
deposited into the "Construction, Major Projects" and "Construction 
Minor Projects" accounts and used for construction, alterations, and 
improvements of any VA medical facility.[L] 

Real property holding agency: VA; 
Authority: Disposal of Enhanced Use Lease Property; 38 U.S.C. § 8164; 
Description of authority: If the Secretary of VA determines during the 
term of an EUL or within 30 days after the end of the lease term that 
the property is no longer needed by the department, the Secretary is 
authorized to initiate an action to dispose of the property. 

Real property holding agency: VA; 
Authority: Retention of Proceeds/Disposal of Enhanced Use Lease 
Property; 38 U.S.C. § 8165; 
Description of authority: Funds received by VA from a disposal of an 
EUL property are deposited into the VA Capital Asset Fund and may be 
used to the extent provided for in appropriations acts for property 
transfer costs such as demolition, environmental remediation, 
maintenance, and repair; costs associated with future transfers of 
property under this authority; costs associated with enhancing medical 
care services to veterans by improving, renovating, replacing, updating 
or establishing patient care facilities through construction projects; 
and costs associated with the transfer or adaptive use of property 
which is under the Secretary's jurisdiction and listed on the National 
Register of Historic Places (see authority below for additional uses of 
EUL disposal proceeds). 

Real property holding agency: VA; 
Authority: Retention of Proceeds/Disposal of Enhanced Use Lease 
Property; Consolidated Security, Disaster Assistance, and Continuing 
Appropriations Act of 2009, P.L. No. 110-329, § 213, 122 Stat. 3574, 
3711 (2008); 
Description of authority: At the Secretary's discretion, proceeds or 
revenues derived from EUL activities, including disposal, may be 
deposited into the "Construction, Major Projects" and "Construction 
Minor Projects" accounts and used for construction, alterations, and 
improvements of any VA medical facility. 

Source: GAO analysis. 

Note: This list is not intended to be an all inclusive list of an 
agency's authorities. Furthermore, this list specifically excludes DOD 
authorities to sell or lease property under a base closure or 
realignment, lands managed by DOI or the Forest Service, except for 
Forest Service administrative sites and the Agricultural Research 
Service's EUL pilot program, and transfers of individual properties 
authorized by Congress. 

[A] Our review of DOD did not include real property at a military 
installation designated for closure or realignment under a base closure 
law. Therefore, for purposes of this appendix we have excluded DOD 
authorities relating to base closure or realignment. Additionally, 
while some authorities in this enclosure, such as 10 U.S.C. § 2667, 
contain subsections relating to base closure and realignment, for 
purposes of this enclosure we are referring to the other subsections of 
the statute. 

[B] Department of Defense Appropriations Act of Fiscal Year 2005, P.L. 
No. 108-287, § 8034, 118 Stat. 951, 978 (2004). 

[C] This authority does not apply to family housing facilities located 
at military installations approved for closure under a base closure law 
or family housing activities located at an installation outside the 
United States at which the Secretary of Defense terminates operations. 
See 10 U.S.C. § 2854a(a)(2). 

[D] This authority does not apply to property or facilities located on 
or near a military installation approved for closure under a base 
closure law. See 10 U.S.C. § 2878(b). 

[E] This authority does not apply to property at a military 
installation designated for closure or realignment pursuant to a base 
closure law. See 40 U.S.C. § 572(b)(2)(B)(ii). 

[F] Department of Defense Appropriations Act of Fiscal Year 2005, P.L. 
No. 108-287, § 8034, 118 Stat. 951, 978 (2004). 

[G] NASA was provided EUL authority in 2003. See the Consolidated 
Appropriations Resolution of FY 2003, P.L. No. 108-7, §418, 117 Stat. 
11, 525-526 (2003). 

[H] The Consolidated Appropriations Act for FY 2008, P.L. No. 110-161, 
§ 533, 121 Stat. 1844, 1931-1932 (2007), amended NASA's EUL authority 
at 42 U.S.C. § 2459j to include any NASA non-excess real property, 
rather than just nonexcess real property at two NASA facilities. P.L. 
No. 110-161 also amended NASA's EUL authority at 42 U.S.C. § 2459j to 
allow for cash consideration only when entering into a lease and to 
prohibit any cash received for the EUL from being used for daily 
operating costs. These amendments are effective as of December 31, 
2008. 

[I] This pilot program was enacted in the Food, Conservation, and 
Energy Act of 2008, P.L. No. 110-246, § 7409, 112 Stat. 1651, 2014-2016 
(2008). 

[J] This authority, the Forest Service Facility Realignment and 
Enhancement Act, was enacted in 2005 as part of P.L. No. 109-54, Title 
V, §§ 501-505, 119 Stat. 499, 559-563 (2005). 

[K] Consolidated Security, Disaster Assistance, and Continuing 
Appropriations Act of FY 2009, P.L. No. 110-329, §149, 122 Stat. 3574, 
3581 (2008). 

[L] This provision has been included in numerous appropriations acts. 
See the Consolidated Security, Disaster Assistance, and Continuing 
Appropriations Act of FY 2009, P.L. No. 110-329, § 213,110 Stat. 3574, 
3711 (2008); the Consolidated Appropriations Act of FY 2008, P.L. No. 
110-161, § 213, 121 Stat. 1844, 2270 (2007); the Consolidated 
Appropriations Act of FY 2005, P. L. No. 108-447, § 117, 118 Stat. 
2809, 3293 (2004); and the Consolidated Appropriations Act of FY 2004, 
P.L. 108-199, § 117, 118 Stat. 3, 371 (2004). 

[End of table] 

[End of section] 

Enclosure III: Flow Charts of Agencies' Real Estate Disposal Processes: 

Figure 9: DOD's Real Property Disposal Process: 

[Refer to PDF for image: illustration] 

1) DOD declares the property excess: 

2) Property is screened for use by another federal agency: 
* If taken by another federal agency: Proceeds go to DOD, with at least 
50 percent of funds going to installation where property was located, 
and are available to be spent; 
* If not taken by another federal agency: 

3) Property is screened for use by homeless organization at no cost: 
* If taken by homeless: No proceeds; 
* If not taken by homeless: 

4) Property is screened for certain other public uses for up to 100 
percent discount of fair market value and for sole source sale to 
public entity for public purpose for fair market value; 
If taken by PBC or if disposed of in sole source sale: Proceeds–if 
there are any–less expenses incurred by GSA for the disposition, go to 
DOD, with at least 50 percent of funds going to installation where 
property was located, and are available to be spent; 
If not taken for PBC or disposed of in sole source sale: 

5) Property is put on market: 

6) Property is sold: Proceeds, less expenses incurred by GSA for the
disposition, go to DOD, with at least 50 percent of funds going to 
installation where property was located, and are available to be spent. 

Source: DOD. 

Note: This flow chart reflects the disposal process under 40 U.S.C. § 
572. 

[End of figure] 

Figure 10: Forest Service's Real Property Disposal Process: 

[Refer to PDF for image: illustration] 

1) Forest Service notifies Congress that it is planning to convey an 
administrative site; 

2) Property is put on market; 

3) Property is sold; 

4) Proceeds go to Forest Service Fund and are available for acquisition 
of administrative facilities, as well as maintenance, construction, and 
conveyance processing costs; regions determine how the proceeds will be 
utilized based on regional facility management priorities. 

Source: USDA. 

[End of figure] 

Figure 11: GSA's Process for Selling Excess GSA-Controlled Real 
Property: 

[Refer to PDF for image: illustration] 

1) Public Buildings Service reports the property excess: 

2) Property is screened for use by other federal agencies; 
* If transferred to another federal agency: Proceeds–if any–go to GSA’s
Federal Buildings Fund; 
* If not transferred to another federal agency: 

3) Property is screened for use by homeless providers at no cost: 
* If conveyed for homeless use: No proceeds; 
* If not conveyed for homeless use: 

4) Property is screened for certain other public uses for up to 100 
percent discount of fair market value, and for negotiated sale to 
public entities: 
* Property conveyed as PBC or negotiated sale: Proceeds–if any–go to 
GSA’s Federal Buildings Fund; 
* Property not conveyed as PBC or negotiated sale: 

5) Property is offered for competitive public sale: 

6) Property is sold: Proceeds go to GSA’s Federal Buildings Fund for 
GSA’s real property capital needs (congressional action is necessary 
for the proceeds to be used). 

Source: GSA. 

[End of figure] 

Figure 12: State Department's Real Property Disposal Process: 

[Refer to PDF for image: illustration] 

1) Department of State declares property excess; 

2) Property is put on market; timing depends on market, economic, 
political, or reciprocity issues; 

3) Property is sold; 

4) Proceeds go to Department of State and are available to be spent for 
acquisition, construction, or other authorized purposes. 

Source: State Department. 

[End of figure] 

Figure 13: U.S. Postal Service's Real Property Disposal Process: 

[Refer to PDF for image: illustration] 

1) USPS declares property excess; 

2) Property is put on market; 

3) Property is sold; 

4) Proceeds go to the USPS general fund and are available to be spent 
on USPS priorities. 

[End of figure] 

Figure 14: VA's Real Property Disposal Process: 

[Refer to PDF for image: illustration] 

1) VA declares the property excess; 

2) Property is screened for use by another federal agency: 
* If taken by another federal agency: Proceeds go to VA; 
If not taken by another federal agency: 

3) Property is screened for use by homeless organization at no cost; 
* If taken by homeless: No proceeds; 
* If not taken by homeless: 

4) Property is screened for certain other public uses for up to 100 
percent discount of fair market value; 
* If taken by PBC: Proceeds—if there are any—go to VA; 
* If not taken for PBC: 

5) Property is screened for sole source sale to public entity for 
public purpose for fair market value; 
* If disposed of in sole source sale: Proceeds go to VA; 
* If not disposed of in sole source sale: 

6) Property is put on market: 

7) Property is sold: Proceeds go to VA Capital Asset Fund for use for
various property disposal and minor medical construction projects 
(congressional action is needed for the proceeds to be used). 

Source: VA. 

Note: If sold by GSA, the proceeds are given to the U.S. Treasury. 

[End of section] 

Enclosure IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

David Wise, (202) 512-2834 or wised@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, Mike Clements (Assistant 
Director), Bob Homan, Grant Mallie, Josh Ormond, Susan Michal-Smith, 
and Alywnne Wilbur made significant contributions to this report. 

[End of section] 

Footnotes: 

[1] Section 102 of Title 40 of the United States Code defines "excess 
property" as property under the control of a federal agency that the 
federal agency determines is not required to meet the agency's needs or 
responsibilities. The General Services Administration's Federal 
Management Regulation defines "not utilized property" as an entire 
property or portion of a property that is not occupied for current 
program purposes of the accountable agency or property that is occupied 
in caretaker status only. The regulation defines "underutilized 
property" as an entire property or portion of a property that is used 
only at irregular periods or intermittently by the accountable agency 
or property that is being used for the agency's current program 
purposes that can be satisfied with only a portion of the property (41 
C.F.R. §§102-75.45 & 75.50). 

[2] GAO, High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-03-119] (Washington, D.C.: January 
2003) and High-Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-09-271] (Washington, D.C.: January 
2009). 

[3] Executive Order No. 13327, Feb. 4, 2004. 

[4] Under the BRAC process, the Secretary of Defense is authorized to 
close certain military bases and dispose of property. In the scope of 
our review, we included real property disposed of by DOD through its 
authority to convey or lease existing property and facilities outside 
of the BRAC process. 

[5] Because USDA's Agricultural Research Service (ARS) received pilot 
authority to enter into EULs for certain properties effective June 
2008, but had not entered into any EULs during our review, we did not 
include ARS in the scope of our review. 

[6] DOI has authorities that permit it to sell certain real property 
and retain the proceeds, but we did not include lands managed by DOI in 
our review. 

[7] According to State, committee reports accompanying State's 
appropriations acts routinely require the department to notify Congress 
through the reprogramming process of the specific planned use of the 
proceeds of the sale of excess property. Furthermore, State indicated 
that it routinely includes discussion of the use of proceeds from the 
sale of real property in its budget justifications and financial plans. 

[8] VA has two authorities under which it can sell real property and 
retain the proceeds. Under the first authority, the Capital Asset Fund 
(CAF) at 38 U.S.C. § 8118, VA can sell real property subject to certain 
restrictions. The proceeds are deposited in the CAF which are subject 
to further congressional action. Under the second authority, VA can 
sell real property related to an EUL that is no longer needed by the 
department. When this property is sold, under 38 U.S.C. § 8165, the 
proceeds are deposited in the CAF which would require further 
congressional action. Alternatively, in its annual appropriations act, 
the Secretary of VA is authorized to deposit proceeds from EULs, 
including sale proceeds, into VA's major or minor construction 
accounts, and use these proceeds for construction, alteration, and 
improvement projects. While congressional action is needed to pass VA's 
annual appropriation acts, no further congressional action is needed 
for VA to spend these proceeds. 

[9] Since these agencies lack disposal authority, GSA would dispose of 
these agencies' excess property and the proceeds from the disposal 
would be deposited into the U.S. Treasury. 

[10] Land that DOD classifies as "underutilized" or "not utilized" may 
not necessarily be considered "excess property." Pursuant to 40 U.S.C. 
§102, "excess property" is defined as property under the control of a 
federal agency that the head of the agency determines is not required 
to meet the agency's needs or responsibilities. Therefore, a parcel of 
DOD real property could potentially be underutilized, yet still not be 
excess, because it is required to meet certain DOD needs or 
responsibilities. 

[11] Title 40 of the United States Code governs the disposal of most 
federal real property. When a federal agency no longer needs a property 
to carry out its mission responsibilities, the property is reported as 
excess and is offered to other federal agencies for use. If another 
federal agency does not have a need for the property, it is considered 
surplus to the federal government. Pursuant to the McKinney-Vento 
Homeless Assistance Act, the Department of Housing and Urban 
Development then reviews the property to determine if it is suitable 
for homeless use. If the property is considered suitable for homeless 
use, it is first made available for homeless use consideration at 100 
percent discount of fair market value by state or local governments and 
certain tax-exempt nonprofit organizations for 60 days prior to any 
other public benefit uses. If the property is not considered suitable 
or if there is no interest in the property, it becomes available for 
other public benefit uses through the public benefit conveyance (PBC) 
program. In the PBC program, state or local governments and certain tax-
exempt nonprofit organizations can obtain the property for an approved 
public benefit use, such as education or parks and recreation. 
Properties can be conveyed to grantees at a discount of up to 100 
percent of fair market value. 

[12] 10 U.S.C. §§ 2854a and 2878. 

[13] DOD has several different authorities to retain proceeds from the 
sale of real property. Under 40 U.S.C. § 572, the Administrator of GSA 
is authorized to dispose of property under the control of a military 
department that is not subject to closure and is excess to the 
department's needs. Proceeds from the sale are deposited into a special 
account in the Treasury for DOD and, since fiscal year 2005, are 
available for expenditure without being subject to further 
congressional action. Also under 10 U.S.C. § 2854a, DOD is authorized 
to convey damaged or deteriorated military family housing and to retain 
the proceeds for use without further congressional action. Under 10 
U.S.C. § 2878, the Secretary is authorized to convey property or 
facilities for the military housing privatization initiative and the 
use of the proceeds is subject to further congressional action. 

[14] Under 40 U.S.C. § 113(e)(7), State is exempt from following Title 
40 requirements regarding the sale of excess real property. 
Furthermore, because State's properties are located outside of the 
United States, the McKinney-Vento Homeless Assistance Act does not 
apply. USPS's own authorities also exempt USPS from these requirements. 
The Forest Service interprets its authority to convey administrative 
sites under 16 U.S.C. § 580d note to exempt it from the requirements 
under Title 40 of the United States Code and the McKinney-Vento 
Homeless Assistance Act. 

[15] FRPP data are requested by constructed asset, and one "property" 
may include many constructed assets. 

[16] Although we asked the agencies to provide data on the number of 
properties sold during fiscal years 2006 and 2007, we are not reporting 
them because the methods that the agencies used to count the number of 
properties were not comparable. 

[17] 41 C.F.R. § 102-75.115. 

[18] In a 2003 report, we found that outleasing historic properties 
under the National Historic Preservation Act, 16 U.S.C. § 470h-3, 
promotes certain benefits such as the restoration of historic 
buildings, but that it is unclear whether selling such properties would 
accomplish the same purpose with greater economic benefit to the 
taxpayer. See GAO, Budget Issues: Alternative Approaches to Finance 
Federal Capital, [hyperlink, http://www.gao.gov/products/GAO-03-1011] 
(Washington, D.C.: Aug. 21, 2003). At times, these outleases, like some 
EULs, have been long-term leases for commercial development. For 
example, in Washington, D.C., GSA leased the U.S. Tariff Building, 
which had been vacant for a number of years, to the Kimpton Hotel and 
Restaurant Group, Inc. for 60 years. This group restored the building, 
converting it into a luxury hotel. 

[19] GAO, Defense Infrastructure: Services' Use of Land Use Planning 
Authorities, [hyperlink, http://www.gao.gov/products/GAO-08-850] 
(Washington, D.C.: July 23, 2008). 

[20] VA's CAF authority at 38 U.S.C. §8118 established a revolving fund 
and granted the Secretary the authority to transfer, sell, or exchange 
real property and deposit funds into the CAF. CAF funds may be used for 
property transfer costs, minor medical construction projects, or 
historic VA properties. 

[21] Under 38 U.S.C. §8165, VA is authorized to spend EUL proceeds 
without further congressional action for EUL expenses and veterans' 
health care services. Additionally, in its annual appropriations act, 
the Secretary of VA is authorized to deposit EUL proceeds into VA's 
major or minor construction accounts, and use them for construction, 
alteration, and improvement projects. While congressional action is 
needed to pass VA's annual appropriation acts, no further congressional 
action is needed for VA to spend these proceeds. 

[22] According to VA officials, VA also has a profit participation 
agreement for the EUL based on the lessee's net income. In 2007, VA 
received proceeds from the profit participation for the first time in 
the amount of about $32,000. 

[23] GSA received permanent authority to sell and retain the net 
proceeds from real property sales in fiscal year 2005. Section 412 of 
P.L. No. 108-447, 118 Stat. 2809, 3259 (2004). 

[24] Section 407 of P.L. No. 108-447, 118 Stat. 2809, 3258 (2004). 
Although we excluded from our legal research transfers of individual 
properties authorized by Congress, we visited this property upon GSA's 
recommendation. 

[25] Under a historic easement, the future owner would have to obtain 
approval from the Maryland Historical Trust for any changes to the 
interior or exterior of the building. 

[26] A USPS official said that the Postal Service originally agreed to 
sell the Farley building for $230 million, including $55 million in a 
deferred purchase price that will not be paid until the commercial 
component of the development is built. The official said that as of 
January 2009, USPS has received $195 million, which is $20 million more 
than was expected because of inflation and other factors. 

[27] In 2001, the Forest Service received authority for a pilot program 
to convey excess Forest Service administrative structures and to retain 
the proceeds from those sales. This 2001 authority was replaced with 
its current authority in 2005. 

[28] GAO, NASA: Enhanced Use Leasing Program Needs Additional Controls, 
[hyperlink, http://www.gao.gov/products/GAO-07-306R] (Washington, D.C.: 
Mar. 1, 2007). 

[29] NASA indicated that the initial agencywide administrative policy, 
which was published in July 2007, has since been updated to reflect the 
legislation and changes to NASA's EUL authority. According to NASA, the 
most recent update was sent to all NASA centers in December 2008 and 
the agency's Office of the Chief Financial Officer sent out financial 
policy for EUL revenue in May 2008. NASA indicated that these actions 
were taken to address the concerns expressed in the GAO review and have 
ensured accountability and transparency and protection for the 
government. 

[30] Under the BRAC process, the Secretary of Defense is authorized to 
close certain military bases and dispose of property. In the scope of 
our review, we included real property disposed of by DOD through its 
authority to convey or lease existing property and facilities outside 
of the BRAC process. 

[End of section] 

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